Bank South Corp., whose advertisements once lampooned the big banks based in North Carolina, is being swallowed up by the biggest of them all: NationsBank Corp.
Charlotte, N.C.-based NationsBank, the nation’s third-largest bank and already the biggest in Georgia, said Tuesday it has an agreement to acquire Atlanta-based Bank South for $1.6 billion in stock.
The deal, the latest in a series of mergers in the banking industry, would solidify NationsBank’s position in the robust Atlanta market and take away another of the few remaining banks that call the city home.
The proposed merger also could serve as a pre-emptive move by NationsBank to prevent other competitors from entering the Atlanta market by acquiring Bank South, long considered an attractive takeover target.
“It’s going to be tough to get into the Atlanta market,” said John A. Pandtle, a banking industry analyst at The Robinson-Humphrey Co. in Atlanta.
Bank South, the fifth-largest bank in Georgia with assets of $7.4 billion, has 149 branches in Georgia, including 60 in-store branches at supermarkets. Its network of 267 automated teller machines is the largest in the state.
NationsBank, formed in 1990 by the merger of Charlotte-based NCNB and Atlanta-based C&S-Sovran;, has $18 billion in assets in Georgia and 189 offices. Overall, the company has $184 billion in assets and operations in nine states and Washington, D.C.
The wave of bank mergers is a response to competition from within and outside the industry. Companies like AT&T; Corp. and General Motors Corp. now have a credit card business. Brokerages offer banking services, such as checking and credit cards, along with investments. Insurers sell retirement investments and credit unions and finance companies are taking away mortgage business.
As with other deals, the NationsBank-Bank South merger plans include eliminating jobs and closing branches.
The merger will result in a substantial number of branches being closed and an undetermined number of jobs cut, said Ken Lewis, NationsBank president. The merged bank will continue the supermarket operations, he said.
Though many branches will be closed, many of the jobs will be transferred to the offices that remain open because of increased business at those locations, Lewis said.
“There will be some actual job loss,” he said. “I think it will be minimal.”
The top executives at Bank South have been offered senior positions at NationsBank, though detailed discussions about the jobs have not yet been held, Lewis said.
The acquisition, unanimously approved by the boards of both companies, provides for each share of Bank South common stock to be exchanged for 0.44 of a share of NationsBank common stock, making the purchase price about $27 a share at the time the deal was announced.
The deal is sure to raise a number of antitrust issues but none that are likely to derail the merger, said Stephen Willard, a Washington attorney who specializes in mergers.
“I don’t see any deal breakers,” Willard said.
For example, the Justice Department might impose some conditions on which branches are closed, primarily to make sure that “underbanked” neighborhoods don’t lose any offices, he said.